- Ferguson reported Q2 FY2024 net sales of $6.673 billion, a 2.2% year-over-year decline primarily driven by ~2% commodity deflation, with gross margin expanding 20 basis points to 30.4% and adjusted operating profit of $520 million (down 10.7% YoY). EPS declined 12.7% YoY to $1.58 on an adjusted basis. Over the last three fiscal years, the company has delivered strong earnings progression despite cyclical pressures, underscoring a durable cash-generative model and disciplined cost management.
- The U.S. market remained challenged across end markets, with Residential trade plumbing down 2% and non-residential (commercial/civil infrastructure) flat. Waterworks was flat, while industrial/fabrication and related segments posted a modest decline. Management attributed the softness to difficult comps and selective weather-related disruptions but emphasized an improving trend in bidding activity and open orders into the second half. February organic growth was flat, suggesting early H2 acceleration as comparisons ease.
- Ferguson highlighted the resilience of its mix, geographic diversification (including Canada), and a flexible cost base. The company is accelerating its capital allocation strategy (CapEx of about $192 million in H1, 3 multifunction distribution centers opened with productivity gains of 20-30%), while maintaining an accretive M&A program expected to contribute roughly $600 million in revenue in FY2024. Net debt to adjusted EBITDA stood at 1.1x, and free cash flow for the half-year was robust (~$700 million).
- Management maintains unchanged FY2024 guidance: revenue broadly flat for the year with end markets down mid-single digits, outperformance of ~300-400 basis points versus that market, and adjusted operating margins in a 9.2%â9.8% range. The near-term macro backdrop remains the primary risk factor, with commodity prices and FX (notably/Canada) potential to swing outcomes. Investors should monitor open orders, bidding activity in Waterworks and nonresidential pipelines, M&A integration progress, and MDC productivity as the principal levers of H2 performance.